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Cost Reduction

Cost reduction means reduction of per unit cost of production by increasing efficiency or productivity. It is permanent process and after reducing cost, any company can survive in stiff competition. There are lots of ways, with this, we can reduce our cost. By changing the layout design, changing the production method, new innovation in marketing, getting cheap advertising like online google ads or facebook ads. Here, I am giving some examples of Cost Reduction

Ist Example

Suppose, we had produced 1000 units of product A and its cost was $ 10,000 and per unit cost was $ 10. Now, company uses cost reduction techniques and gives more stress to increase efficiency and to manage waste. After this, cost of production of same 1000 units was reduced to $ 9000. Due to this, per unit cost was reduced by $ 1. This is the simple example of cost reduction. Now, we give some examples of corporate sector.

2nd Example

Previous year, NACIL had succeeded to reduce its cost when company saw there is not economic benefit from Govt. side, it tried to change the system to pay wages and salaries to employees. With every appointment of employee on load, it reduced its cost.

3rd Example

Recently, the company who is making third pull on hindon river has reduced its cost. Total cost of making third pull was decided to Rs. 32 Crores, now, its cost is Rs. 28 Crore 72 lakhs. It means govt. saves 3.28 Crores due to this decreasing of cost. With this, society will get benefit because govt. money is public money and cost reduction in it will be helpful to complete other big projects of public interest.

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